Universities Australia has welcomed the announcement of A$652 million in National Health and Medical Research Council grants, but warned moves to abolish, cut or further delay other funding programs would hurt Australia’s economic prosperity.

Health Minister Tanya Plibersek announced the funding for 1,141 grants at the University of Sydney on Friday.

“The Gillard Government is proud to be supporting Australia’s best and brightest health and medical innovators as they undertake their world-beating research,” Ms Plibersek said.

The announcement comes as the research sector braces for possible cuts, or further delays to funding, with the current round Australian Research Council linkage grants yet to be opened due to a government-imposed freeze.

“At a time when there are concerns about the future of Australian manufacturing and our reliance on resources, we must stand behind the new industries being driven by our innovative research sector,” said Universities Australia chief executive Belinda Robinson.

“Serious questions remain, however, about the future of billions of dollars of other research and innovation funding across Government,” Ms Robinson said.

“The government has left open the possibility of programs being delayed, cut or abolished.

Universities Australia has criticised the stop-go approach to funding and investment decisions from the government, arguing it is undermining efforts to retain the best and brightest researchers.

Tertiary Education Minister Chris Evans told Senate Estimates hearings last week that it was a "ridiculous proposition” to argue the funding freeze had sent research overseas.

However University of Western Sydney pro vice chancellor of research, Andrew Cheetham, said the uncertainty over funding was impacting the decisions of researchers being recruited by the university.

“We have actually lost good researchers in a recruitment process who have decided not to come here after all because the funding was too unpredictable.”

Professor Cheetham said one researcher that the university was hoping to recruit chose a one-year contract in the UK over a two-year renewable contact in Australia because he was a unsure his contract would be renewed.

The University of Melbourne will receive the greatest amount of funding from the NHMRC, with A$89.6 million for 162 grants.

Mental illness in children and young people will also be targeted with 13 grants totalling A$13.7 million, as part of a Federal Budget commitment to boost preventative and early intervention health initiatives.